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How to Evaluate Identity Theft Protection Programs

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The Federal Trade Commission is a consumers front line of defense against consumer fraud.

Federal Trade Commission, 2010

In 2008 the FTC published a brochure – To Buy or Not To Buy. In it, they say most identity theft protection programs charge you to do things you can do yourself for free. That doesn’t mean they have no value, though. In fact, identity protection programs have become more popular for the past several years.

There are many different ways an identity theft program can help. Most services have two or three of these components. Here’s a brief guide to help decide if a specific program is right for you.

Credit Monitoring

According to a FTC Identity Theft report, more than half of all identity theft victims reported a new line of credit opened in their name by the identity thief. It also says those accounts took longer to discover and clear up.

A monitoring service lets you know if something shows up on your credit report, like a new line of credit or a charged-off debt. If you want to safeguard your identity, experts agree this is the best place to start.

But credit monitoring is like a smoke detector. All it will do is let you know you have a problem. If an identity thief is using a credit card number they stole from you, it may not even do that.

The downside is that credit is just a part of your identity. There are 8 types of identity theft. Credit monitoring only helps with one.v

Reimbursement Services

An identity theft reimbursement program is often part of a homeowner’s policy, and don’t cost much. It may even be free. Ask your insurance agent for coverage details, but here’s an idea of what to expect.

  • Minor out-of-pocket expenses like sending certified mails or making long distance phone calls.
  • Some time off work may be reimbursed at your rate of pay. If this is part of your program, plan on paying taxes next year for using it.
  • Limited legal fees for things like re-applying for home loans.
  • Money taken from your bank account or put on a credit card will be considered “actual losses.” These services don’t pay you back for actual losses. You may be able to get your money back from the bank, though.
  • However, you should expect to keep track of everything you spend fixing the problem.

Resolution Services

Identity theft resolution services help guide you through fixing the problem. If you’re a “hands on” person, you’ll love them. Some will assign you an agent, others operate like call centers – whoever you get on the phone is your help for the moment. The person you talk with will have different titles – guide, advocate, counselor – but they will all do the same thing: tell you what to do next. They usually work from a standard script and step-by-step guide.

  • Most resolution services will walk you through these steps.
  • Some will send you a “recovery packet” with form letters and contact numbers.
  • They may provide you with forms or software to track your progress.
  • They may even keep track of your progress and remind you if something still needs to be done.

Restoration Services

There are a couple of identity theft restoration services that will fix your problem for you. For these to work, you have to sign a limited power of attorney. This lets the company act in your name, so be sure to understand exactly what you’re signing.

  • Restoration services tend to cost a bit more than the other programs. People that use them, though, say they’re well worth the cost.
  • Just because you sign a power of attorney for a service doesn’t mean it’s a restoration service.
  • Some companies say they do restoration, but are actually resolution programs. Find out how much work they do for you before signing up.

Prevention Programs

Some programs say they can prevent identity theft from happening to you. But Uncle Sam has spent thousands of man-hours and millions of dollars trying to figure out how to stop identity theft. They’re still working on it. So it’s hard to believe a private company can do it for $10-$15 a month.

Legal Help

Identity theft usually causes legal problems for the victim. Some states have even set up a special legal process to help victims recover. But most protection services exclude or limit access to legal help. You can call your state attorney general’s office or legal aid for direction. They may refer you to the state bar, who will refer you to a lawyer.

You might be able to save some money, though. Check with your HR person at work. Many companies offer legal services through their EAP, or have a pre-paid legal program as a voluntary benefit.

Finally, most identity theft services only help if you have them in place before you need them. There are programs (and individuals) who will work with you after the fact. There is little oversight for these programs, so use your best judgment before working with them.

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